[Proposal] Governance Mining

Authors: @Coopahtroopa @0xLucas @James @Callum

Summary:

This proposal marks the first step at implementing Governance Mining in Balancer. The programs mentioned below represent genesis incentives to be iterated, evolved and implemented with support from the community.

We propose that a small portion (~3k BAL) of the 145k BAL distributed weekly through liquidity mining be used for Governance Mining programs through the implementation of a community-lead Governance Committee.

Governance Mining will feature both programmatic and manual distribution at inception, consisting of BAL incentives relative to the different contributions to the network.

Motivation:

Strong governance is a crucial foundation for any DeFi protocol, and one that deserves to be encouraged as we look to champion quality contributions around ways that Balancer can be used in the wider ecosystem and novel ways to bring community together.

As one of the early pioneers in liquidity mining, it’s important to recognize that strictly distributing tokens to LPs favors passive participation rather than active contribution.

Governance Mining represents the first step towards rewarding community members for actively participating in governance through a number of mechanisms.

Governance Mining will consist of a number of ongoing programs, starting with:

  • GovFactor - Added BAL factor to addresses that have voted on the most recent governance proposal.
  • Forum Contributions - Leveraging SourceCred to distribute BAL to those who are leading thoughtful discussion on this governance forum.
  • Governance Committee - Seeding trusted community members with ownership of Governance Mining rewards to be allocated and managed through BAL governance.
  • Discord Engagement - Enabling BAL tipping for education and a longer vision to allow Discord roles to unlock tiered-access to new proposals and governance discussions.
  • Proposal Farming - Fixed BAL incentives to those who create a proposal that is implemented through governance.

The combination of onchain and offchain programs creates a powerful dynamic where actors can contribute to Governance Mining in whatever they see fit, with active participants being able to capture value from multiple programs in parallel.

GovFactor

The GovFactor acts as an on-chain voting incentive for one of the protocol’s most important contributors: Liquidity Providers (LPs).

We’re proposing to implement a GovFactor for Liquidity Providers who vote on proposals, boosting BAL liquidity mining rewards while creating a unified incentive for those that service the protocol to become active governance participants.

While the exact numbers are to be discussed, we’re proposing a GovFactor of between 1.1 - 1.25x, providing a moderate boost on an LP’s BAL incentive.

The factor will function as an on/off switch where if the Liquidity Provider voted on the last on-chain proposal, their GovFactor is “on’’ and they receive the incentive boost on their weekly BAL distributions. If the LP did not vote on the last proposal, the GovFactor is “off” and the LP forfeits the bonus BAL.

The GovFactor’s on/off nature creates a constant incentive for LPs to always be active in governance and aligns the LP with the core purpose of the BAL token - governance rights.

It’s important to note that this incentive does not come out of the Governance Mining program and only acts as a factor towards the existing liquidity mining program.

Governance Committee

The Balancer project should be led by a combination of the core team, token holders and community members alike, representing a diverse group of stakeholders with a shared interest in the long term sustainability and growth of Balancer.

This group will be responsible for managing and distributing the Governance Mining treasury with the hopes of programmatically distributing the allocation over time.

The Governance Committee will be made up of a fixed number of participants, consisting of an equal split between team, investors, partners and community members.

This structure can be expanded over time, decentralizing the control of the Governance Committee, these members will be incentivized with ongoing BAL distributions.

Over the next week, we plan to provide an open call to the community, asking those interested in joining the committee to make a request for their own role. These responses in tandem with feedback from the Balancer team and community liaisons will be used to select the genesis members pending community approval.

Forum Incentives

The Balancer governance forum is the home to the most important discussions and Balancer Improvement Proposals (BIPs).

This program looks to offer a fixed amount of stablecoins per month to those contributing in meaningful ways, measured using SourceCred to track aggregate likes, posts and engagement across all topics.

Balancer’s SourceCred instance should be heavily weighted towards the amount of likes received across all posts, rather than the quantity of contributions.

Inspired by Maker’s SourceCred trial, we believe this program gives active community members a way to earn from value added-conversations, as posts that receive the most likes, replies and tractions stand to capture the largest share of rewards.

Should the signal of this program be favored by the community, the next step is to present the formula used in the Balancer SourceCred instance to be ratified through a Snapshot vote.

Discord Engagement

We’ve noticed community members on Discord playing an active role in educating new users on the ins and outs of Balancer and want to create mechanisms for those actions to be easily validated and rewarded.

The first instance of Discord Engagement will implement native tipping to the Discord server, allowing anyone to send BAL to other community members for actions they deem to be valuable. This is likely to be initially leveraged by the Balancer team and larger token holders as a way to show gratitude to the most engaged community members.

The second instance will look to add a BAL emoji that allows community members to share a weekly allocation of BAL based on the amount of emote reacts received throughout the server.

This program looks to serve as an ongoing medium for community members to better share BAL amongst one another, with future ambitions to include a permissioned structure for token-based roles and channel access using tools like Collab.Land.

Proposal Farming

Governance Mining will look to allocate a fixed BAL reward to community members that submit a proposal that passes a governance vote.

This program aims to incentivize the creation of new proposals, while BAL incentives are only allocated to proposals that are adopted and implemented by Balancer.

Governance Mining Allocations

BAL allocated to Governance Mining should primarily be funded as a portion of the weekly 145k BAL distributed through liquidity mining, sent directly to the Governance Committee to decide on allocations and distribution schedules.

The specifics of each of the above mentioned programs, along with their exact release date should be discussed in line with community feedback and ratified through an onchain vote.

Timeline & Next Steps

We have proposed this plan on the forum to encourage active conversation around all the topics above. The rough timeline would be to implement Governance Mining at the start of January, giving the community ~a month to discuss, finalize and implement the proposed programs.

Outside of this forum, further discussions around the aspects of this proposal will live in the #governance channel on Discord.

We look forward to your feedback and are excited to be an early adopter of governance incentives to foster a healthy and active community of BAL holders!

9 Likes

Conceptually I’m a fan of this, however I think this proposal needs a couple of key items:

  1. A success metric such that we can understand if this is actually working or not. For example if this coincides with a v2 of Balancer being launched we need to understand that the uplift in governance is not due to v2 but rather due to the governance mining
  2. Limit the scope of this experiment. All the areas make sense but it feels like we’d be trying to do too much. I’d rather focus on one area and do it really well before we then move to another area - otherwise we’re trying to boil the ocean here

Some specific thoughts:

  • GovFactor: I raised issues here but wallets are effectively doxxed. Not a fan of this.
  • Governance Committee: I’d like to see this as potentially members nominated and then voted on. Potentially there should be some mechanism here to remove those voted in as well? Also is there compensation mechanism here for this committee?
  • Forum Incentives: how do you avoid this being gamed? Given the forum usage is not terribly high and it’s not too hard to game the system right now (just create fake accounts)

There’s still a lot more to be discussed for each particular area but I think we need to focus on a particular area first. I’d propose we reduce the scope of this to be the following experiment:

1. Governance Committee

This seems to be the first logical step to getting people on board. We would need to answer the following:

  • The mechanism to vote someone in
  • The mechanism to vote someone out
  • Compensation (if any)
  • How are their votes ratified and implemented
  • What are the powers of the committee
  • What are the limits and bounds of the committee
  • What are the expectations that members of the committee need to have

Forum Incentives

There is already a pretty robust discord discussion from when there was governance items to be discussed. Potentially getting people to migrate that discussion to a more structured medium like the forum will help. Some questions we need to answer:

  • What constitutes quality vs quantity (metric/other)
  • How do you ensure the system is not gamed
  • What does success look like
1 Like

Thanks for the feedback @tongnk - lots to unpack here :slight_smile:

This will vary by program, however I would view success as more active governance participation measured by higher activity on this forum, more proposals being submitted and a higher number of unique voter turnout on polls.

I think this makes sense. We wanted to present all programs and work backwards from there as to have the most impact at launch as possible. Given it is a new experiment, we figured catering to all different actors was the best way to get everyone involved.

How are wallets being doxxed here? You vote on Snapshot and that wallet receives a multiplier. This is no different from receiving a multiplier for providing BAL liquidity?

Committee members would be eligible to earn a ‘BALary’ which they can choose to accept or defer. We’ve been working on a framework for this to be shared as a next step should the community see value in this taking form.

There’s no way to avoid this outright. Looking to Maker as an example, weighting CRED based on the aggregate amount of likes/attention posts receive is far different from someone just spamming random comments. In order to collect rewards, contributions will have to be meaningful and drive traffic which in itself is a good start.

I’d agree that Governance Committee + Forum Incentives are a good first step here, but would push back on the GovFactor as I think it is pretty simple to implement and an easy way for larger LPs to see meaningful value by staying up to date with whats going on with Balancer governance.

Much more conversation to be had here but great first step!

1 Like

Wait so what is the extent of the Governance Committee? Are they not saying yes/no to individuals in which then you apply a gov factor? You would then have to say in this case that “I own this wallet address” to the world… Otherwise to your point one can simply create a bot to game the system and just create garbage posts, likes, replies etc

This will vary by program, however I would view success as more active governance participation

Would be good to get some stats around this as a baseline first if that’s the case. We should probably aim to streamline how we calculate it for transparency sake

Personally I don’t like the idea of funding a committee- it brings with it accountability questions and it’s too vague and challenging to measure success. All the committees I’ve participated in tended to waste time and resources because the mandate is vague and subjective.

Governance must be accountable and objectively measurable.

1 Like

These are very valid concerns and ones we definitely want to take to heart.

No, GovFactor is simply looking at addresses who have voted on the most recent proposal on Snapshot and adding a multiplier to their weekly BAL liquidity mining allocation. No need to cross-link any addresses to a forum or public username anywhere.

NEXT STEPS

Totally agreed that coordinating and funding a committee right out of the gate seems like a big task and not one we should rush into. Instead, would love to get feedback around a much softer program where we allocate BAL to those with the #BALer tag on Discord who have demonstrated they are knowledgable and willing to act as a community steward.

After listening to this feedback I’d also agree with @tongnk that reeling back the scope of this first Governance Mining program makes a lot of sense.

:fire:_:fire: is going to work on a synthesized version of this featuring the GovFactor (with opsec in mind), and ‘Community Mining’ i.e. Forum + Discord incentives using SourceCred and abstain from launching a formal committee out of the gate.

Thanks all for the feedback :slight_smile:

4 Likes

The first more concise version of this program is now live for discussion in the form of a GovFactor - incentivizing those who vote in governance with a higher LP factor.

There’s been great feedback on both sides and would love to get any and all feedback Proposal: GovFactor

2 Likes

The feedback from the GovFactor proposal has been implemented and has now made its way to a Snapshot vote!

1 Like

Do you know if there is a status update on the progress of implementing sourcecred for balancer?

1 Like